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When Should an Employer Contest an Unemployment Claim – or Not?

Unemployment claims are not always clear cut. Even employees fired for cause might still be entitled to unemployment under certain conditions. Similarly, in some situations employers might choose not to challenge an otherwise contestable claim.

Why? It’s all about strategizing around legal obligations. Be aware that employees can be eligible for unemployment in a fairly broad array of situations, including some that you might not suspect.

Ultimately, it is the state’s unemployment office that makes claim determinations; however, employers are typically allowed to contest claims under certain conditions.

That said, even if your organization could rightfully contest the claim, you might not want to do so.

For instance, if the fired employee seems litigious, you might instead come to an agreement not to contest unemployment benefits as long as the former employee agrees not to sue (check with your legal counsel to ensure this is an applicable option for your state). Or, if you have failed to sufficiently document the problems that led to the termination, or if the documentation reveals problems at the employer relevant to the termination, you might wish not to challenge the claim so that you don’t have to present evidence to the state. Also, remember that as far as the state cares, if it isn’t written down, it didn’t happen.

On the other hand, there might be strategic value in contesting the claim after all. Unemployment insurance rates are often partly based on the number of claims made against the employer. If you think a current claim could push your rates up, that might encourage you to contest it. Or, if you suspect or worry that the employee is going to file a wrongful termination suit, contesting an unemployment claim can give employers an opportunity to get some insight into the employee’s thinking on their termination and what kind of evidence they have amassed. Just bear in mind that whatever is presented for documentation at the claim level or testimony at a hearing may later be requested by the former employee or his/her attorney and produced.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.